Debt reduction doesn’t have to be an overwhelming experience. Who wants to deal with a cure that’s more painful than the ailment? Mounting debt is stressful enough – then you have to face the task of figuring out just where to start if you want to get rid of it. Then there are all the different angles of attack you can take and that just adds to the frustration.
So here’s a simplified approach that will get you started in the right direction for debt reduction. After all, sometimes the simplest approach is the most effective. This 9 step plan can help you get out of debt and stay out.
1. Spend less than you make. Easier said than done, right? I agree, but this is the very first step in any debt reduction effort. And there’s no getting around it. The only way to get out of debt is to spend less than you make. The key is to get determined to make it happen.
2. Make a budget. Your budget is your plan. Follow it and it will get you where you want to go. Most people don’t like the budgeting part but it’s absolutely necessary. The key to a budget is don’t make it too complicated. You don’t need to account for every single penny.
To find your starting point, determine how much you spend each month and what you spend it on. Make a list of all your typical expenses you would have over a one month period. Then you see where you can make cuts and adjustments. Keep finding ways to reduce those expenses until you are spending less than you make. Laying it all out in a budget and sticking to it will help keep your spending under control.
3. Know the difference between good debt and bad debt. Good debt helps you make money in the long run or at least won’t help you lose money. Your mortgage and student loans are examples of good debt. Your house usually appreciates over time and an education usually helps you get better paying jobs.
A car loan is neither good nor bad. They tend to be lower interest loans but cars typically don’t appreciate in value. So the best thing is to make sure your car loan is manageable and fits within your budget.
All other debt is bad debt. This includes credit card debt, payday advances, and all high interest credit or loans. These are the things that don’t appreciate in value and now that you have put them on credit or loan, you just continue to pay for them month after month in the form of interest. So you want to tackle these debts head on in your debt reduction efforts.
4. Choose the one credit card you have that has the lowest interest rate. Make sure the monthly spending limit is within your monthly budget and use this card for emergencies only. Then cut up the rest of your credit cards. Now that you have your lowest interest rate card, [...]
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Debt Reduction – Your Simple 9 Step Plan
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Christian Debt Reduction: a More Humane Approach
There is no doubt in anyone’s mind that getting deep into debt is a very stressful time. For one, the mind of the debtor is troubled and filled with worry about how he will be able to pay his bills and adequately address his basic needs at the same time. He could also be thinking of how he will be able to provide for his family’s needs given the financial condition that he is facing.
And then, there is the feeling of insecurity and paranoia that could be plaguing him. He is often wary of answering the knock on the door or picking up the phone when it rings; the person on the other side of the door or on the other line could be a creditor’s agent who came to collect for payment that the debtor cannot deliver. Maybe he could not bear to look at other people’s eyes anymore out of fear of finding out whether or not they whisper behind his back about the debt problem he is facing and how “irresponsible” he is.
In the process of making good the payments due to them, creditors and collectors alike sometimes forget that the debtor is a human being, subject to being hurt, humiliated and bewildered by the financial trouble he is facing. That is why there are Christian debt reduction agencies around. They aim to address debt reduction in a more humane way.
Christian debt reduction agencies are non-profit companies certified and recognized by Christian churches and Christian debt organizations. These Christian debt reduction companies claim that their methods and services are based on Biblical principles. They do not just aim for debt reduction; their end goal is to get their clients to rebuild their creditability.
Another trait that sets Christian debt reduction agencies apart from other debt settlement companies is that Christian debt reduction companies try to dig the reason behind the accumulation of debt and attempt to help their clients get over it. They understand that compulsive and irresponsible spending is not always the reason why debtors get deep into debt. The debt could be a result of the client losing his job, getting an illness or accident that forced him to stop working for a long period, or if there is a sudden death in the family that the debtor was not prepared for.
Because Christian debt reduction companies are non-profit organizations, oftentimes they charge lower monthly payments at a reduced percentage of interest. Also, the client usually has the option to settle this monthly payment at any day he can make it, without worrying about facing late payment penalty fees or over-limit charges. Christian debt reduction companies also try to work out a reduction of debt of up to 50% to 70% from their client’s creditors in behalf of their client. Once terms have been reached in negotiation, the period for debt settlement often takes three to six years.
For the downtrodden debtor who is tired [...]
